Corporate America seeks reforms, says budget not game-changing

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Calling the Indian budget 'measured but without game-changing reforms,' a US-India trade group has expressed the hope that the government would deliver on foreign investor friendly key reforms during the budget session.

"Several policy announcements in Finance Minister Pranab Mukherjee's Budget, especially in taxation-raised concerns," said the US-India Business Council (USIBC) comprising nearly 400 top American and about a score Indian companies seeking stronger India-US commercial ties.

USIBC "looks to the coming Budget Session of Parliament to deliver on key reforms that would signal to foreign investors that the Government of India remains steadfast in its objective to achieve strong GDP growth and expand global trade," the trade group said.

It noted some positive elements, including the liberalisation of FDI and External Commercial Borrowing (ECB) in civil aviation, the allowance of Qualified Foreign Investors (QFI) to directly invest in corporate bonds, and an increase in defence spending at a time of essential national security and technology cooperation.

"Given continuing apprehension about the anaemic global economic recovery, India's policy environment must compete aggressively for international investment," said USIBC president Ron Somers.

"For foreign investors to have confidence in India, a predictable and transparent tax environment is essential," he said.

"USIBC encourages the Government of India to support the Supreme Court decision on Vodafone and avoid any regressive policy changes," Somers said.

"The 2012-13 budget's s progressive reforms in civil aviation, infrastructure, and capital markets should not be undercut by inconsistent tax policy," he said.

Diane Farrell, executive vice-president of USIBC, said: "Predictability is vital for attracting and keeping the foreign investment necessary to attain the growth projections stated by Minister Mukherjee today."